Rep Jeb Hensarling [R-TX/+1 202 225-3484/@RepHensarling] is the sponsor of HR 10, the Financial CHOICE Act of 2017, which will ban investors from putting petitions to the shareholders and board of publicly traded companies, except when investors own more than 1% of the company for at least three years.
Under the present system, any shareholder with a $2000 or more stake in the company for at least a year can make a proposal. Small investors are likely to put forward motions limiting executive compensation, opposing layoffs, and advocating for ethical business practices in terms of pollution, subcontracting and accounting.
By contrast, large shareholders are more likely to vote for extraordinary dividends, share buybacks, selloffs of assets, and similar measures.
A group of fiduciaries and members of the New York State Office of the Comptroller have issued a stinging statement denouncing the act as an attempt to "to silence investors, large and small, who seek a vote on corporate action that could put our investments at risk and diminish corporate accountability."
A broad coalition of state fiduciaries joined New York State Comptroller Thomas P. DiNapoli and New York City Comptroller Scott Stringer [on June 6, 2017] in issuing a Joint Statement on Defending Fundamental Shareowner Rights in strong support of the use of shareholder proposals as an essential tool in maintaining corporate transparency and accountability. The Statement is in response to provisions of the Financial CHOICE Act, legislation pending in the U.S. House of Representatives, which would effectively prohibit most investors from filing shareholder proposals."This Act attempts to silence investors, large and small, who seek a vote on corporate action that could put our investments at risk and diminish corporate accountability," DiNapoli said. "Publicly-owned companies are responsible to their shareholders, but this Act is trying to overturn that core principle by allowing only a select few of the largest investors to question corporate behavior."
"There is nothing about the CHOICE Act that provides 'choice.' It's a deliberate attempt to undermine shareowner rights and erode accountability at companies big and small. This legislation was written by corporate executives, for corporate executives—at the expense of the rest of us," Stringer said.
[H.R.10 – Financial CHOICE Act of 2017
/Sponsor: Rep. Hensarling, Jeb [R-TX-5]]
Federal Bill Attempts to Silence Investors
[Gianna McCarthy and George Wong/The Harvard Law School Forum on Corporate Governance and Financial Regulation]
(via Naked Capitalism)
